Implied Contract Exceptions by State

Under an implied contract exception, an employer is not permitted to dismiss an employee if an implied contract exists between both to infer that they are not hired on an at-will basis. Under this exception, there is no express written contact that actually states this, but rather an understanding of the company’s policies that indicates this – usually in the form of an employee handbook or something similar. 37 states and the District of Columbia enforce an implied contract exception. However, it is widely established that proving the terms of an implied contract are often incredibly difficult, with the burden of proof falling on the fired employee.

Covenant of Good Faith Exceptions by State

Also known as an “implied-in-law” contract, the covenant of good faith and fair dealing exception states that employers may only terminate employees based on just cause and good faith. This exception protects employees who feel they may have been terminated in bad faith; examples of this include:

• Firing an employee shortly before they are retired, in order to avoid paying retirement benefits
• Dismissing an employee to prevent paying them a bonus that they are owed.

11 states currently have exceptions on the basis of covenant of good faith. However, successfully filing a wrongful termination suit based on this exception is often incredibly difficult, as it can be truly complicated to determine a company’s true motivations for firing an employee.

All At-Will Employment Exemptions By State

Summing it all up, this table lists the status of each state regarding At-Will Employment exemptions for public policy, implied contracts and covenant of good faith.

State	Public Policy	Implied Contracts	Covenant of Good Faith
Alabama	No	Yes	Yes
Alaska	Yes	Yes	Yes
Arizona	Yes	Yes	Yes
Arkansas	Yes	Yes	No
California	Yes	Yes	Yes
Colorado	Yes	Yes	No
Connecticut	Yes	Yes	No
Delaware	Yes	No	Yes
District of Columbia	Yes	Yes	No
Florida	No	No	No
Georgia	No	No	No
Hawaii	Yes	Yes	No
Idaho	Yes	Yes	Yes
Illinois	Yes	Yes	No
Indiana	Yes	No	No
Iowa	Yes	Yes	No
Kansas	Yes	Yes	No
Kentucky	Yes	Yes	No
Louisiana	No	No	No
Maine	No	Yes	No
Maryland	Yes	Yes	No
Massachusetts	Yes	No	Yes
Michigan	Yes	Yes	No
Minnesota	Yes	Yes	No
Mississippi	Yes	Yes	No
Missouri	Yes	No	No
Montana	Yes	No	Yes
Nebraska	No	Yes	Yes
Nevada	Yes	Yes	No
New Hampshire	Yes	Yes	No
New Jersey	Yes	Yes	No
New Mexico	Yes	Yes	No
New York	No	Yes	No
North Carolina	Yes	No	No
North Dakota	Yes	Yes	No
Ohio	Yes	Yes	No
Oklahoma	Yes	Yes	No
Oregon	Yes	Yes	No
Pennsylvania	Yes	No	No
Rhode Island	No	No	No
South Carolina	Yes	Yes	No
South Dakota	Yes	Yes	No
Tennessee	Yes	Yes	No
Texas	Yes	No	No
Utah	Yes	Yes	Yes
Vermont	Yes	Yes	No
Virginia	Yes	No	No
Washington	Yes	Yes	No
West Virginia	Yes	Yes	No
Wisconsin	Yes	Yes	No
Wyoming	Yes	Yes	Yes